The essential role of normative economic theory and biases
B&P state that “whether FEBs are correct or incorrect is orthogonal to the importance of studying them” (sect. 1.4, para. 5). We find this statement perplexing; systematic deviations from economic theory are what demarcates this area of research. Why are beliefs about such superficially disparate topics as trade, immigration, and domestic welfare programs unified under the umbrella of FEBs? Simply put, these topics are all informed by economic first principles and programs of empirical study. What else makes these beliefs “economic”?
It is further not the case that FEBs encompass lay beliefs about all phenomena addressed by normative economic theory. Rather, all of the FEBs that B&P describe are those that depart systematically from the consensus of economic science. Whether FEBs are rooted in economic ignorance, and thus qualify as “folk” beliefs, is more important than B&P acknowledge. Without normative foundations and evidence of systematic deviations from them, there would be no such paper searching for ultimate explanations of FEBs. The bias approach defines FEBs, and getting this descriptive science correct is a necessary first step in understanding them.
The knowledge that FEBs are biases may do little to explain their particular contents, however, as B&P note. In advocating the pursuit of ultimate rather than proximate explanations, they argue that biases are often simply restatements of the empirical phenomena in question. This may sometimes be the case, but the value of the bias approach is far from limited to re-description. For example, B&P's introduction of this approach references Caplan's (Reference Caplan2007) taxonomy of biases about the economy. Yet a bias such as Caplan's anti-foreign bias not only encompasses several FEBs (including B&P's FEBs 1–3), but also identifies mistrust of foreigners as a unifying explanation, just as B&P do by invoking coalitional psychology.
Admittedly, anti-foreign bias cannot explain the origins of this mistrust. This is presumably why B&P argue that ultimate explanations can advance knowledge further than proximate explanations can: explaining the origins of FEBs allows for a better understanding of their cultural success and persistence. Although we tend to agree, even the veracity of this claim depends on the particular FEB in question, as we illustrate with the following example.
An illustration: Evidence for the mechanisms underlying anti-profit beliefs
B&P present FEB 6 as the belief that the profit motive is detrimental to general welfare. The authors explain this phenomenon (as well as FEB 5, the belief that markets negatively impact society) by way of modules for cheater and free-rider detection that are triggered by impersonal conditions of exchange (i.e., the absence of personal relationships with potential exchange partners). We cannot see why an ultimate explanation emphasizing impersonality is necessary or sufficient to explain these beliefs. If people observed personalized individual agents profiting disproportionately from exchanges, would they suddenly appreciate the benefits of the profit motive itself? Or how competitive markets harness it for good? Almost certainly not.
Our own research on anti-profit beliefs (Bhattacharjee et al. Reference Bhattacharjee, Dana and Baron2017) suggests that these beliefs are better understood by considering that in any isolated one-shot exchange, ancient or modern, profit is zero-sum. Greater surplus to one side entails less to the other. Since excessive profit indicates visibly unequal outcomes, it is easy to see why it is viewed with contempt.
On the other hand, the positive incentive effects of profit – motivating producers to make the goods that are most needed, deliver them where they are most needed, and do so efficiently – are literally invisible to the consumer. These value-creating, positive-sum aspects of profit result from consumers and competing producers changing their behavior in response to incentives. But these processes are dynamic, dispersed, and removed in space and time from any single transaction. Accordingly, the proximate explanation of the bias towards a zero-sum view of profit is simply that its zero-sum aspects are far more apparent than its positive-sum aspects.
Given the visible aspects of most exchanges for most people, it is no wonder that intuition persistently favors a zero-sum view of profit, regardless of our evolutionary past. Ultimate explanations provide a nice complement by further explaining why people are already inclined toward zero-sum views. But proximate explanations can sufficiently explain the persistence of these particular FEBs, as well as how people can be disabused of them. Even when they can track reputations across repeated exchanges and freely choose their partners, our studies find that, on their own, people fail to appreciate how these personalized conditions enable positive-sum exchange. We demonstrate that explicitly prompting people to think through how competitive market dynamics shape incentives, step by step, is necessary to attenuate anti-profit beliefs.
Looking ahead: Complementary perspectives
We applaud B&P's call to examine ultimate explanations for FEBs from our evolutionary past. This approach complements our own perspective on the nature and prevalence of zero-sum views of exchange, underscoring why people would be predisposed to these beliefs in the first place. But just as identifying an error in human judgment is of limited use in itself, knowing that FEBs are rooted in evolved inference systems may not be sufficient to understand and correct them.
Indeed, sometimes the proximate route of examining current contexts of exchange is a better path to understanding a particular FEB than examining ancestral contexts of exchange. More broadly, comparison with normative economic models can play an important role in inspiring and amending ultimate explanations. Both perspectives are mutually informative, and both may be essential to advancing the scientific discourse and improving human welfare.
Boyer & Petersen (B&P) provide a superb overview of folk-economic beliefs (FEBs) and identify their potential evolutionary origins. They suggest that ultimate explanations, by way of specialized cognitive inference systems that evolved as adaptations to ancestral human small-scale sociality, are the best way to understand the contents of FEBs. We agree with B&P that the evolutionary origins of FEBs are important and understudied. But their perspective is too dismissive of other explanations, namely ignorance of economic theory and specific cognitive biases, as foundations for the empirical study of FEBs.
The essential role of normative economic theory and biases
B&P state that “whether FEBs are correct or incorrect is orthogonal to the importance of studying them” (sect. 1.4, para. 5). We find this statement perplexing; systematic deviations from economic theory are what demarcates this area of research. Why are beliefs about such superficially disparate topics as trade, immigration, and domestic welfare programs unified under the umbrella of FEBs? Simply put, these topics are all informed by economic first principles and programs of empirical study. What else makes these beliefs “economic”?
It is further not the case that FEBs encompass lay beliefs about all phenomena addressed by normative economic theory. Rather, all of the FEBs that B&P describe are those that depart systematically from the consensus of economic science. Whether FEBs are rooted in economic ignorance, and thus qualify as “folk” beliefs, is more important than B&P acknowledge. Without normative foundations and evidence of systematic deviations from them, there would be no such paper searching for ultimate explanations of FEBs. The bias approach defines FEBs, and getting this descriptive science correct is a necessary first step in understanding them.
The knowledge that FEBs are biases may do little to explain their particular contents, however, as B&P note. In advocating the pursuit of ultimate rather than proximate explanations, they argue that biases are often simply restatements of the empirical phenomena in question. This may sometimes be the case, but the value of the bias approach is far from limited to re-description. For example, B&P's introduction of this approach references Caplan's (Reference Caplan2007) taxonomy of biases about the economy. Yet a bias such as Caplan's anti-foreign bias not only encompasses several FEBs (including B&P's FEBs 1–3), but also identifies mistrust of foreigners as a unifying explanation, just as B&P do by invoking coalitional psychology.
Admittedly, anti-foreign bias cannot explain the origins of this mistrust. This is presumably why B&P argue that ultimate explanations can advance knowledge further than proximate explanations can: explaining the origins of FEBs allows for a better understanding of their cultural success and persistence. Although we tend to agree, even the veracity of this claim depends on the particular FEB in question, as we illustrate with the following example.
An illustration: Evidence for the mechanisms underlying anti-profit beliefs
B&P present FEB 6 as the belief that the profit motive is detrimental to general welfare. The authors explain this phenomenon (as well as FEB 5, the belief that markets negatively impact society) by way of modules for cheater and free-rider detection that are triggered by impersonal conditions of exchange (i.e., the absence of personal relationships with potential exchange partners). We cannot see why an ultimate explanation emphasizing impersonality is necessary or sufficient to explain these beliefs. If people observed personalized individual agents profiting disproportionately from exchanges, would they suddenly appreciate the benefits of the profit motive itself? Or how competitive markets harness it for good? Almost certainly not.
Our own research on anti-profit beliefs (Bhattacharjee et al. Reference Bhattacharjee, Dana and Baron2017) suggests that these beliefs are better understood by considering that in any isolated one-shot exchange, ancient or modern, profit is zero-sum. Greater surplus to one side entails less to the other. Since excessive profit indicates visibly unequal outcomes, it is easy to see why it is viewed with contempt.
On the other hand, the positive incentive effects of profit – motivating producers to make the goods that are most needed, deliver them where they are most needed, and do so efficiently – are literally invisible to the consumer. These value-creating, positive-sum aspects of profit result from consumers and competing producers changing their behavior in response to incentives. But these processes are dynamic, dispersed, and removed in space and time from any single transaction. Accordingly, the proximate explanation of the bias towards a zero-sum view of profit is simply that its zero-sum aspects are far more apparent than its positive-sum aspects.
Given the visible aspects of most exchanges for most people, it is no wonder that intuition persistently favors a zero-sum view of profit, regardless of our evolutionary past. Ultimate explanations provide a nice complement by further explaining why people are already inclined toward zero-sum views. But proximate explanations can sufficiently explain the persistence of these particular FEBs, as well as how people can be disabused of them. Even when they can track reputations across repeated exchanges and freely choose their partners, our studies find that, on their own, people fail to appreciate how these personalized conditions enable positive-sum exchange. We demonstrate that explicitly prompting people to think through how competitive market dynamics shape incentives, step by step, is necessary to attenuate anti-profit beliefs.
Looking ahead: Complementary perspectives
We applaud B&P's call to examine ultimate explanations for FEBs from our evolutionary past. This approach complements our own perspective on the nature and prevalence of zero-sum views of exchange, underscoring why people would be predisposed to these beliefs in the first place. But just as identifying an error in human judgment is of limited use in itself, knowing that FEBs are rooted in evolved inference systems may not be sufficient to understand and correct them.
Indeed, sometimes the proximate route of examining current contexts of exchange is a better path to understanding a particular FEB than examining ancestral contexts of exchange. More broadly, comparison with normative economic models can play an important role in inspiring and amending ultimate explanations. Both perspectives are mutually informative, and both may be essential to advancing the scientific discourse and improving human welfare.